Post by LIFE AND DEATH on May 16, 2005 12:46:02 GMT -5
Eight Ways To Kick-Start Your Retirement Fund
By Renee D. Turner, BET.com Staff Writer
Posted March 17, 2005 -- Whether you’re on your first job or been working 10 years, there’s no time like now to start investing in your future. Nicole Simpson, a financial planner and author of "Planning for Financial Success," says you should look for investments that will at the very least keep pace with inflation.
Here are eight other ways our advisers say you can kick-start your retirement fund:
1. If Your Job Offers A 401K Program, Take it. Many companies today offer 401K retirement programs instead of pension plans. The money is taken out of your pay check off the top, so it’s pre-tax dollars. The company will match the amount you save up to a certain limit. Find out what that is, and match it.
2. Establish an IRA. Even if your company doesn’t offer a retirement plan, you can save on your own Individual Retirement Account. Basically, you can put up to $3,000 a year into your IRA. These are post-tax dollars. Whether or not you can take a tax deduction depends on your income. If you participate in your company’s retirement plan, you can still have a traditional IRA if you make less than $55,000 this year. But remember, if there is an emergency and you have to take money out of your IRA, you will be penalized and pay taxes on your withdrawal.
3. Get A Roth IRA. The major difference between the Roth IRA and a traditional IRA is that with the Roth you are not penalized for making a withdrawal, but you also don’t get a tax deduction on your contributions.
4. Consider Cash-value Life Insurance. Cash-value life insurance policies are basically variable life insurance polices that provide you with life insurance but also give you some financial flexibility. You can take money out if you have an emergency or simply need the cash. The money is subtracted from the value of the policy.
5. Stash Money Into A Savings Account, with a BIG proviso. Traditionally, if you’re a saver, your instincts tell you to stash money away in a nice cozy savings account. Well, this is not necessarily the safest, or best, way to put money away for your retirement. First, savings accounts don’t keep pace with inflation, our advisers warn. A dollar saved today does not a dollar make 30 years from now, because things will be much more expensive in the future. If you are not a risk-taker, consider a Certificate of Deposit account, which combines the beauty of savings with the least risky way of investing.
6. Buy Stocks. Consider working with a good financial adviser to establish a diversified stock portfolio. Remember, stocks over time have better earnings than other investments. Also, remember that once you retire, you never withdraw all your money at once, Simpson says. With stocks, you continue to earn through your retirement years and the rest of your life.
7. Buy Real Estate. Once you own property, not only do you get the tax break but you have a resource from which to draw down equity through retirement.
8. Start a Business On The Side. The beauty of this move is that you can usually contribute up to 25 percent of your self-employment income to a tax-deductible Keogh plan, which is like a 401K plan for the self-employed, even if you're already putting money into another plan.
Are you concerned that Social Security might not be around when you retire?
By Renee D. Turner, BET.com Staff Writer
Posted March 17, 2005 -- Whether you’re on your first job or been working 10 years, there’s no time like now to start investing in your future. Nicole Simpson, a financial planner and author of "Planning for Financial Success," says you should look for investments that will at the very least keep pace with inflation.
Here are eight other ways our advisers say you can kick-start your retirement fund:
1. If Your Job Offers A 401K Program, Take it. Many companies today offer 401K retirement programs instead of pension plans. The money is taken out of your pay check off the top, so it’s pre-tax dollars. The company will match the amount you save up to a certain limit. Find out what that is, and match it.
2. Establish an IRA. Even if your company doesn’t offer a retirement plan, you can save on your own Individual Retirement Account. Basically, you can put up to $3,000 a year into your IRA. These are post-tax dollars. Whether or not you can take a tax deduction depends on your income. If you participate in your company’s retirement plan, you can still have a traditional IRA if you make less than $55,000 this year. But remember, if there is an emergency and you have to take money out of your IRA, you will be penalized and pay taxes on your withdrawal.
3. Get A Roth IRA. The major difference between the Roth IRA and a traditional IRA is that with the Roth you are not penalized for making a withdrawal, but you also don’t get a tax deduction on your contributions.
4. Consider Cash-value Life Insurance. Cash-value life insurance policies are basically variable life insurance polices that provide you with life insurance but also give you some financial flexibility. You can take money out if you have an emergency or simply need the cash. The money is subtracted from the value of the policy.
5. Stash Money Into A Savings Account, with a BIG proviso. Traditionally, if you’re a saver, your instincts tell you to stash money away in a nice cozy savings account. Well, this is not necessarily the safest, or best, way to put money away for your retirement. First, savings accounts don’t keep pace with inflation, our advisers warn. A dollar saved today does not a dollar make 30 years from now, because things will be much more expensive in the future. If you are not a risk-taker, consider a Certificate of Deposit account, which combines the beauty of savings with the least risky way of investing.
6. Buy Stocks. Consider working with a good financial adviser to establish a diversified stock portfolio. Remember, stocks over time have better earnings than other investments. Also, remember that once you retire, you never withdraw all your money at once, Simpson says. With stocks, you continue to earn through your retirement years and the rest of your life.
7. Buy Real Estate. Once you own property, not only do you get the tax break but you have a resource from which to draw down equity through retirement.
8. Start a Business On The Side. The beauty of this move is that you can usually contribute up to 25 percent of your self-employment income to a tax-deductible Keogh plan, which is like a 401K plan for the self-employed, even if you're already putting money into another plan.
Are you concerned that Social Security might not be around when you retire?